Powell's Books looming large in the Bay Area

Published 4:00 am, Friday, August 11, 2006

When Berkeley's Black Oak Books closed its North Beach branch in San Francisco this summer, there was no hassle dealing with the thousands of volumes that made up the used-book inventory.

Black Oak cut a deal with Powell's Books, the world's largest independent purveyor of used books. Powell's has eight stores in Portland, Ore., making the city a mecca for used-books lovers, and a Web site (www.powells.com) that's become the go-to destination for anyone seeking a hard-to-find tome.

"They sent down a truck," said Nick Setka, a Black Oak employee. "They spent a day packing. They spent a day loading. And they were gone. They've obviously done this many times before."

In recent years, Powell's has systematically purchased the entire inventory of a number of Bay Area used-book stores. Before Black Oak, there was Chelsea Books in San Francisco. Before that there was Adobe Book Shop, also in the city.

Used-book sellers in the region say it's become increasingly difficult to compete with Powell's because of its vast inventory -- more than 4 million titles in stock -- and the company's ability to undercut rivals' prices.

They also say that as more used-book stores go under amid economic hardship, Powell's will only grow more formidable as it snaps up huge quantities of additional books at fire-sale prices, often as low as 15 cents on the dollar.

"Powell's has been doing this all over the country," said Allan Milkerit, a San Francisco bookseller specializing in used and rare volumes. "But they've been especially active in the Bay Area because of the number of used books here."

He said Powell's sends buyers to the Bay Area every two or three months to scour the shelves of various shops, and dealers routinely alert one another whenever the Powell's people are making the rounds.

"I always know when they're coming to my store," Milkerit said.

Emily Powell, daughter of Powell's owner Michael Powell and the company's director of used books, said she understands the impact Powell's has had on smaller used-book sellers.

"We certainly make it harder for others," she acknowledged. "We're part of why this is an increasingly challenging business."

But Powell said the company's Portland facilities constitute an important cultural resource -- something anyone who's visited the sprawling flagship store, which takes up an entire city block, would readily attest to.

She also said that ever-increasing online sales are a factor of Powell's having been among the first independent bookstores to embrace the Internet, making it today the Amazon of used books.

Powell's recorded its first online sale in 1994. Within 10 years, the company's online operation had dozens of employees and was operating out of a 60,000-square-foot warehouse.

"Powell's saw, for better or for worse, what the Internet's impact would be on the book industry," said Hut Landon, executive director of the Northern California Independent Booksellers Association. "They quickly figured out how to use it to their advantage."

Powell said her company's turnover of millions of used books annually requires a steady stream of additional volumes to replenish and expand its supply.

"We need books," she said. "We have folk who keep their ear to the ground and know when libraries are closing or businesses are shutting down."

Powell added: "We try not to be buzzards flying over. But if we see something that would be a good match for us, inventorywise, we'll make a call. We'll send buyers to anything that looks like it might be a good deal."

Or, just as often, Powell's will be contacted by a prospective seller.

Black Oak's Setka said that when a decision was made in the spring to close the North Beach store, one of the company's co-owners, Bob Brown, called Powell's and asked if there was any interest in purchasing the inventory. There was.

Setka said Powell's immediately dispatched buyers to appraise the stock.

"While they were here," he recalled, "they sent one of their people over to our Irving Street store as well and then said they wanted to make a deal for that, too."

The North Beach branch was shutting down, but Black Oak was committed to its Irving Street operation. Nevertheless, Black Oak's owners recognized Powell's offer as a unique opportunity to clear out excess inventory and agreed to also empty the other store.

In all, about 250,000 books were carted away in mid-June by Powell's for a price rumored to be in the hundreds of thousands of dollars. Neither Black Oak nor Powell's would discuss details of the transaction.

Black Oak is now replenishing the stock at its Irving Street branch. But Setka said he doesn't know what the future holds for used-book companies like his.

"We have a store full of books, and the Internet has made 90 percent of them less valuable than they were before," he observed. "It makes books more accessible, which means that something we used to sell for ten bucks we now sell for a dollar."

Pete Mulvihill, co-owner of San Francisco's esteemed Green Apple Books, said he hasn't been approached by Powell's about a possible buyout. But it could be just a matter of time.

"They're aggressive about buying books," he said. "They'll be a bigger and bigger player if they continue to operate this way."

Bryan Bilby echoed this sentiment. He sold about 12,000 volumes to Powell's several years ago when he closed Chelsea Books in San Francisco's Inner Sunset District and moved to the East Coast.

In the Mission District, used- and rare-book dealer Milkerit said he's barely keeping his head above water.

"Business has been terrible," he said. "It's really awful -- as bad as I've ever seen it."

Things are getting so rough, Milkerit said, he's fallen behind on the rent for his San Francisco apartment and for the first time is pondering the likelihood of having to close his shop and dispose of his beloved books.

How would he do that?

"I'd call Powell's," Milkerit said.

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